The complete guide to paperless accounts payable

Businesses have recognized the value of moving away from paper-based systems over the last decade, but the transition to digitized solutions has only just begun. The digital transformation market is anticipated to grow at a rate of 20.9% year over year through 2032.

‍

While companies are employing digital technologies in all business areas, accounts payable is often one of the first departments to make the switch—for good reason. The move to paperless AP can eliminate the many issues of manual AP processing, saving you time and money.

What is paperless accounts payable?

Paperless accounts payable simply means using a digital system rather than a paper-based system for your AP process. By using technology like cloud storage, automation tools for invoice processing and approval workflows, and intelligent document scanning like optical character recognition (OCR), your business can break free from time-consuming manual processes.

Why should businesses make their AP paperless?

Transitioning to a paperless AP system can bring your business a number of benefits:

• Improved efficiency: Your AP team won’t need to input incoming invoices manually, eliminating bottlenecks and boosting processing speed
• Reduced costs: Some estimates report that storing paper documents can cost businesses up to 141x more than storing digital documents—and that doesn’t even factor in the cost of input errors or labor. Adopting a paperless AP process takes time and effort, but over time, the cost savings will be well worth it.
• Greater control and transparency: Digitizing your AP process makes it easier to manage. At the click of a button, you can run AP reports, view invoices, or perform calculations, giving you better insight into your vendor payment cycle.
• Sustainability: Paper processing is not only costly from a labor standpoint, but the waste it produces is harmful to the environment. On top of that, many vendors, customers, and other stakeholders would prefer to work with sustainable partners
• Optimized for remote teams: Paperless AP is better suited for remote and hybrid work. You may still need a small team in-house, but once you onboard vendors to your digital platform, your team can operate remotely.
• Improved access control: A fully paperless department helps you control who has access to important records and who can change them
• Easier collaboration: Paperless AP helps you collaborate with other departments. For example, if a vendor has a question about an unpaid invoice, the purchasing department should be able to pull up the invoice digitally and see where it is in the payment cycle.
• Enhanced security: When you adopt paperless AP, you boost internal controls over your payment processes because most transactions will be automated. The fewer touch points you have, the fewer opportunities for human error or accounts payable fraud.

How to transition to a paperless accounts payable process

The transition to paperless AP is likely simpler than you think. But to get through the transition phase smoothly, there are a few best practices to consider:

Plan the transition process

Before considering solutions, take a moment to assess where you are. What do your current workflows look like? What are your pain points? How many paper documents do you receive, and how many need to be digitized? From there, you can better compare your options.

Involve key stakeholders and teams

Choosing the right paperless accounts payable system shouldn’t be up to one team. Your accounts payable department should collaborate with some of the following teams during the transition phase:

• IT department: They’ll be implementing the software you select, so get them on board from the beginning
• Purchasing department: These team members will help vendors and suppliers comply with the new expectations around digital invoices
• Leadership team: You shouldn’t implement a new AP workflow without oversight. The leadership team will help ensure the software package stays within budget and works within the company’s broader tech stack.

‍

It might be smart to create a tiger team with representatives from different departments to oversee the software implementation. This can help ensure that all needs are considered, not just those of the AP department.

Handle existing paper documents

Manually scanning invoices and vendor contracts can take time. Fortunately, technology like OCR can make the process much faster. Once you scan them, you can securely dispose of the physical documents per the guidelines you and your transition team established.

‍

Even once you’ve fully transitioned to paperless AP, paper documents may still make their way into the process. Your vendors and suppliers, for example, may continue to send paper invoices. Define how you’ll handle those paper documents when they get sent your way.

Select the right AP automation solution

Consider the following factors when evaluating accounts payable automation software:

• Integration capabilities: An ideal paperless AP system should integrate seamlessly with your existing tech stack, specifically your accounting software or ERP
• Security measures: How does the software protect sensitive data? Your vendor data and payment information need to be encrypted.
• Mobile accessibility: The software you choose should be cloud-based so remote team members can access it from anywhere

‍

If you want to learn more about the factors to consider when choosing accounts payable software, keep reading—we discuss these factors (and others) below.

Customize software and workflows

A high-quality paperless AP solution should be customizable enough to fit your needs. For example, if your business prefers to pay via ACH transfer rather than check, you’ll want to find software that flags vendors who prefer ACH so you can use the proper payment method for every scenario.

Train employees and establish new processes

Get your employees on board by providing adequate training. Yes, train your AP department, but also consider what other departments need training on the new system. Your purchasing department, for example, should know your preferred B2B payment method before building relationships with new suppliers and vendors.

Scale with automation

The best solutions should offer automation features to boost your AP efficiency. Many paperless AP systems offer the following automation capabilities:

• Capture and record invoice data: You can use OCR to automate invoice processing and eliminate manual data entry
• Invoice matching: AP software can automatically compare the purchase order to the invoice (a process called 2-way matching) and flag any discrepancies
• Approvals: Once invoices have been recorded, the automated system can route them to the right approver based on pre-defined rules (e.g., invoice amount, department, supplier, etc.)
• Electronic payments: Your system may be able to make ACH or credit card payments automatically without management approval
• Reconciliation: AP software may be able to reconcile payments to invoices and update your general ledger accordingly

How to choose the right paperless AP solution

Consider the following factors when choosing new paperless AP software:

‍

Cut the paper, up the efficiency: Try Ramp’s AP solution

Paperless solutions can streamline AP processes by improving efficiency, saving money, and enabling sustainability. If you want some inspiration, consider Bratjen Construction, who transitioned away from time-intensive manual AP by adopting Ramp’s modern finance platform.

‍

Michael Irvin, Bratjen’s director of operations, explained how Ramp provided much-needed efficiency: “As soon as we get an invoice now, we can drag it over into Ramp Bill Pay and populate all the vendor information. … Before, we would have to pay an invoice and mark up a PDF with all that information. Now everything’s just a click of a button.”

‍

Sound appealing? Learn more about how Ramp’s AP automation software helps businesses like Bratjen handle a month’s worth of AP in minutes.